Pound Weakens as Dollar Strengthens on French Fiscal Concerns
The British pound (GBP) has weakened by 0.26% against the US dollar (USD), dropping to around 1.3200 during early European trading on Monday. This decline is driven by the USD's strength, fueled by increased safe-haven demand amid rising concerns over French fiscal policies.
The US Dollar Index (DXY), which measures the dollar's strength against six major currencies, has climbed 0.42% to near 102.53, marking a fresh yearly high. The USD has shown the strongest performance against the euro, with gains also seen against other currencies like the Japanese yen and Canadian dollar.
Traders have scaled back expectations for a hawkish Federal Reserve (Fed) policy move in October following the release of the US Nonfarm Payrolls (NFP) data, which indicated moderate job growth. The CME FedWatch tool now shows an 82.3% probability that the Fed will keep interest rates steady, a significant shift from last week's 35.8%. Later in the day, investors will watch the US ISM Services Purchasing Managers Index (PMI) for September, expected to rise to 55.7 from 55.4 in August.
Technically, GBP/USD is trading at 1.3207, maintaining a bearish near-term outlook as it remains below the 20-day exponential moving average (EMA) at 1.3324. The Relative Strength Index (14) stands at 33, suggesting that while downside pressure persists, the sell-off is losing momentum. Key support is seen at the year-to-date low of 1.3140, with a break below potentially targeting 1.3100 and the psychological level of 1.3000.